Determining factors affect customer loyalty in business to business context of vietnamese information technology companies in ho chi minh

-i- DETERMINING FACTORS AFFECT CUSTOMER LOYALTY IN BUSINESS-TO-BUSINESS CONTEXT OF VIETNAMESE INFORMATION TECHNOLOGY COMPANIES IN HO CHI MINH CITY In Partial Fulfillment of the Requir

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DETERMINING FACTORS AFFECT CUSTOMER LOYALTY IN

BUSINESS-TO-BUSINESS CONTEXT OF VIETNAMESE INFORMATION

TECHNOLOGY COMPANIES IN HO CHI MINH CITY

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

DETERMINING FACTORS AFFECT CUSTOMER LOYALTY IN BUSINESS-TO-BUSINESS CONTEXT OF VIETNAMESE

INFORMATION TECHNOLOGY COMPANIES IN HO CHI MINH CITY

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

In Marketing

by

Ms Duong Thi Hoang Trang ID: MBA06037 International University - Vietnam National University HCMC

August 2014 Under the guidance and approval of the committee, and approved by all its members, this thesis has been accepted in partial fulfillment of the requirements for the degree Approved:

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ACKNOWLEGEMENT

This thesis is done with great deal of supporting from the wonderful people, who showed significant concern towards me during the time of working on this dissertation I would like to take this opportunity to express my sincere gratitude to them

I wish to express my deepest gratitude to Dr Le Thanh Long for his great supervision and continuous support as well as providing critical insights during the course of my research

I would like to extend my thanks to all people who spend their valuable time for completing all questionnaires, especially for their assistance, coordination and support during the research survey process

Last but not least, I want to say thankful to my family, who always beside me and give me power to complete my dissertation

With many thanks,

PLAGIARISM STATEMENTS

I would like to declare that, apart from the acknowledged references, this thesis either does not use language, ideas, or other original material from anyone; or has not been previously submitted to any other educational and research programs or institutions I fully understand that any writings in this thesis contradicted to the above statement will automatically lead to the rejection from the MBA program at the International University – Vietnam National University Ho Chi Minh City

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COPYRIGHT STATEMENT

This copy of the thesis has been supplied on condition that anyone who consults it

is understood to recognize that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without the author’s prior consent

©Duong Thi Hoang Trang/MBA06037/2014

Table of Contents

Chapter 1: INTRODUCTION 1

1.1 Research background: 1

1.2 Rationales and Problem statement: 3

1.3 Research question: 4

1.4 Research objectives: 4

1.5 Scope of research: 5

1.6 Significance of research: 5

1.7 Research structure: 5

Chapter 2: LITERATURE REVIEW AND RESEARCH MODEL 7

2.1 General concept: 7

2.1.1 Business-to-business (B2B): 7

2.1.2 Information technology (IT): 8

2.2 Customer Loyalty: 8

2.2.1 Definition: 8

2.2.2 Importance of customer loyalty: 10

2.3 Antecedents of customer loyalty: 11

2.3.1 Customer satisfaction: 12

2.3.2 Trust: 13

2.3.3 Commitment: 14

2.3.4 Switching Cost: 15

2.4 Research model and hypothesis: 16

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Chapter 3: RESEARCH METHODOLOGY 18

3.1 Research design: 18

3.2 Research process: 20

3.3 Measurement design: 21

3.3.1 Customer loyalty measurement: 21

3.3.2 Customer satisfaction measurement: 21

3.3.3 Trust measurement: 22

3.3.4 Commitment measurement: 23

3.3.5 Switching cost measurement: 24

3.4 Questionnaire design: 25

3.4.1 Preliminary research: 25

3.4.1.1 First draft of questionnaire: 25

3.4.1.2 Interview: 26

3.4.2 Pilot test: 27

3.4.3 Final format of questionnaire: 28

3.5 Data collection method: 32

3.6 Population and Data Sampling: 33

3.7 Data analysis method: 35

3.7.1 Coding data: 35

3.7.2 Descriptive statistics: 37

3.7.3 Reliability and Validity test: 38

3.7.3.1 Reliability test: 38

3.7.3.2 Factor analysis: 38

3.7.4 Regression analysis: 39

Chapter 4: DISCUSSION AND FINDINGS 41

4.1 Response rate: 41

4.2 Demographic data: 41

4.3 Descriptive Statistics: 42

4.3.1 Customer loyalty: 42

4.3.2 Customer satisfaction: 43

4.3.3 Trust: 44

4.3.4 Commitment: 45

4.3.5 Switching Cost: 46

4.4 Results of Reliability test: 48

4.4.1 Cronbach’s Alpha for independent variables: 49

4.4.1.1 Customer Satisfaction: 49

4.4.1.2 Trust: 49

4.4.1.3 Commitment: 50

4.4.1.4 Switching Cost: 51

4.4.2 Cronbach’s Alpha for dependent variables: Customer Loyalty: 52

4.5 Results of Validity test: 53

4.5.1 The components scale: 53

4.5.2 Customer Loyalty scale: 64

4.6 Official Research Model: 66

4.7 Regression analysis: 67

4.7.1 Correlation analysis: 67

4.7.2 Regression analysis: 69

Chapter 5: CONCLUSION AND RECOMMENDATION 77

5.1 Conclusion 77

5.2 Recommendation 77

5.3 Limitation and future research 83

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REFERENCES 84

APPENDIX 92

Appendix 1: Structured interview 92

Appendix 2: Survey Questionnaire (English Version): 95

Appendix 3: Survey questionnaire (Vietnamese version) 100

Appendix 4: Descriptive Statistics 105

Appendix 5: Result of reliability test 107

Appendix 6: Result of exploratory factor analysis 111

LIST OF TABLES

Table 1.1: ICT Development Investment (IDI) ranks of Viet Nam and the Southeast

Asian countries from 2002-2012 2

Table 3.1: Fundamental differences between qualitative and quantitative research strategies 19

Table 3.2: Customer Loyalty Measurement 21

Table 3.3: Customer Satisfaction Measurement 22

Table 3.4: Trust Measurement 23

Table 3.5: Commitment Measurement 24

Table 3.6: Switching Cost Measurement 25

Table 3.7: Final format of questionnaire 32

Table 3.8: Summary Information of the Survey Sampling Method 35

Table 3.9: Subscales coding 37

Table 4.1: Summary of Demographic Data 41

Table 4.2: Customer loyalty descriptive statistics 42

Table 4.3: Customer satisfaction descriptive statistics 44

Table 4.4: Trust descriptive statistics 45

Table 4.5: Commitment descriptive statistics 46

Table 4.6: Switching cost descriptive statistics 47

Table 4.7: Reliability test’s result – Cronbach’s Alpha 48

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Table 4.8: Reliability coefficient of customer satisfaction measurement scale 49

Table 4.9: Reliability coefficient of trust measurement scale 50

Table 4.10: Reliability coefficient of commitment measurement scale 51

Table 4.11: Reliability coefficient of switching cost measurement scale 51

Table 4.12: Reliability coefficient of customer loyalty measurement scale 52

Table 4.13: The KMO and Bartlett's component measurement coefficient of factors affect the Customer Loyalty 53

Table 4.14: Extraction Sums of Squared Loadings round 1st 55

Table 4.15: Exploratory Factor Analysis round 1st 57

Table 4.16: Extraction Sums of Squared Loadings round 2nd 59

Table 4.17: Exploratory Factor Analysis round 2nd 61

Table 4.18: Extraction Sums of Squared Loadings round 3rd 62

Table 4.19: Exploratory Factor Analysis round 3rd 64

Table 4.20: Customer Loyalty scale KMO and Bartlett's coefficient 65

Table 4.21: Extraction Sums of Squared Loadings 65

Table 4.22: The Results of factor analysis of Customer Loyalty scale 66

Table 4.23: Correlation matrix between the variables 68

Table 4.24: Regression analysis round 1st 70

Table 4.25: Summary result of hypotheses test round 1st 71

Table 4.26: Regression analysis round 2nd 72

Table 4.27: Summary result of hypotheses test round 2nd 73Table 5.1: The trust creation process 80

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LIST OF FIGURES

Figure 1.1: Vietnam IT Industry Revenue from 2011-1013 3

Figure 2.1: Conceptual Framework 17

Figure 3.1: Research process 20

Figure 4.1: The research model studying factors affecting Customer Loyalty 66

ABSTRACT

Customers are key asset of organization and customer loyalty plays important role

in business survival Especially, in Information Technology (IT) industry, business customers seem to be easy to switch many suppliers because of intensive competition Therefore, this research aims to determine factors which affect loyalty of business customer in Information Technology Industry in Ho Chi Minh City (HCMC)

Conceptual model was proposed after an extensive review of the literature and practical situation of IT industry in HCMC Data was collected from 220 IT business customers who made purchasing decision Descriptive statistics, reliability test, factor analysis, correlation testing, regression analysis, T- test, One-way ANOVA were applied

to analyze and test hypothesis of conceptual model Results of the study show that customer satisfaction, trust, and commitment positively and significantly influence customer loyalty In addition, customer satisfaction and trust are primary antecedent of customer loyalty In contrast, switching costs does not influence customer loyalty

Keywords: customer loyalty, customer satisfaction, trust, commitment, switching cost,

IT industry

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Chapter 1: INTRODUCTION

The first aim of this dissertation is to determine factors affect customer loyalty towards information technology (IT) business-to-business (B2B) context in Ho Chi Minh City In this chapter, researcher would like to introduce an overview of the IT industry in Vietnam Then the research problem, the research question and the research objectives, scope and limitation, the significance of this study and the structure of this thesis are presented

1.1 Research background:

Overview of the Information Technology (IT) industry in Vietnam:

According to the ranking of the report on Measuring of Information Society by the International Telecommunication Union (ITU), the ICT (Information and Communication Technology) Development Index of Viet Nam continued to rise 5 places from 86th to 81st, ranked 4th in the Southeast Asia and ranked 12th among 27 countries in the Asia- Pacific region In the past 10 years (2002-2012), Viet Nam had a spectacular breakthrough from position 107 to position 81 with a jump of 26 steps The IDI ranking is based on 3 main sub-indexes such as ICT assess, ICT use, and ICT skills where Viet Nam was highly rated by ITU in terms of IT applications with a rank of 76thamong 161 countries worldwide in 2012 (White Book, 2013, p.17)

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Table 1.1: ICT Development Investment (IDI) ranks of Viet Nam and the

Southeast Asian countries from 2002-2012

(Source: White Book, 2013, p.17)

In spite of facing difficulties and challenges caused by the economic crisis, the IT industry kept being a high growth rate economic sector This sector simultaneously has asserted a diffuse impact on boosting other sectors and fields of the economy and society and create more jobs and improve laborers’ income The total revenue of IT industry in 2012 reached about 25.5 billion USD, and increase of 86.3% compared to the same period of 2011 (White book, 2013, p.13) Vietnam IT industry is more and more development with total revenue was amounted over 39 billion USD, increasing by 55% compared with recent year of 2012 Although Vietnam’s ranking seems to be stable in worldwide evaluation in the period time from 2013 to 2014, the striking point

of Vietnam that IT industry was considered and recognized by international organization

through Vietnam belonging to top 10 among Asia-Pacific countries which lead in software outsourcing (White book, 2014)

Figure 1.1: Vietnam IT Industry Revenue from 2011-1013

( Source: White Book, 2013; White Book, 2014)

1.2 Rationales and Problem statement:

Over the last decade, in Vietnam, information technology had become the industry which had high growth rate, contributed nearly 7% GDP (VCCI, 2013), and had many opportunities to develop in the future In order to maximize profitability in long-term, firms know that customers are key asset of organization and customer loyalty has a significant role in business survival Unfortunately, it is undoubtable that customers nowadays tend to consider other potential competitive alternatives even they are satisfied with their suppliers, especially with development of internet, the world

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becomes flatter with plain information thoroughly Companies need a competitive advantage to stand out from the competition Hence, it is necessary to determine factors affecting customer loyalty in business-to-business context To survive and develop in intensively competitive environment nowadays, especially in the information technology industry, suppliers must know the way to attract more and more customers and build a long-term relationship with them as well as step by step obtain customer’s loyalty through many factors

From the above reasons, author would like to study business customer loyalty and choose the topic as follows:

Determining factors affect customer loyalty in business-to-business context of Vietnamese information technology companies in Ho Chi Minh City

1.3 Research question:

From problem statement, the study will investigate the following research questions:

Which factors affect customer loyalty in business-to-business context of Vietnamese Information Technology Companies in Ho Chi Minh City?

1.4 Research objectives:

This research is aimed to:

- To determine which factor has most impact on customer loyalty in business context of Vietnamese information technology companies in Ho Chi Minh City

business-to To make the recommendations in order to improve customer loyalty for companies in information technology industry

1.5 Scope of research:

The present study has certain limitations, and caution is therefore advised with respect to the generalizability of the results The simplicity of the examining of loyalty ignores both the existence of different phases of loyalty in a relationship continuum and the complexity of service/product offerings In addition, due to limitation of time and cost constraints, the sample size for the research is only confined to those customers responded within three month Moreover, the data is gathered at one point of time

This dissertation will concentrate on Vietnamese information technology companies in Ho Chi Minh City which have primary business involving trading and distribution in IT hardware product such as computers (laptop, PC,LCD, accessories), servers, etc…and software (Microsoft, Oracle, etc…)

1.6 Significance of research:

This dissertation contributes to determine factors which impact customer loyalty in business-to-business context of Vietnamese information technology companies Researchers expect that the findings of this study will help managers to understand the way to manage long-term relationship with their customer through many factors affecting customer loyalty

In addition, author also hopes these findings will be valuable and can be extended more in other industries in future study

1.7 Research structure:

This dissertation comprises 5 chapters as below:

- Chapter 1: Introduction

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This chapter gives a brief introduction about research background; problem solving of customer loyalty in the information technology companies and objectives of research

- Chapter 2: Literature review and research model

This chapter introduces conceptual framework about some related concepts and theories

of the study, then hypotheses are built based on these basic concepts

- Chapter 3: Research Methodology

This chapter states the method used in research which includes data collection and sampling and also the way how to analyze data in order to test the measurement and conceptual framework

- Chapter 4: Discussion and Findings

This chapter presents and discusses the results of the correlation analysis of the research hypothesis and the assessment of the reliability of the research data After presenting the results of the research in the previous chapter, the implications of these results are now discussed in the light of the literature review

- Chapter 5: Conclusion and Recommendation

Draw out the conclusion and research limitations are identified and recommendations of the research are also discussed in this chapter

Chapter 2: LITERATURE REVIEW AND RESEARCH MODEL

In this chapter, researcher aims to list some literatures relevant to this dissertation Firstly, it would be started with the information technology business-to-business concept Next, definition and importance of customer loyalty, and then followed by the most important and popular factors which affect customer loyalty are presented These factors are customer satisfaction, trust, commitment, and switching cost

2.1 General concept:

2.1.1 Business-to-business (B2B):

Frauendorf et al (2007, p.9) defined “the field of business-to-business as one which, in brief, describes transactional relations between business partners, including business enterprises organization, and governmental institutions” The customers in a B2B market would hereby be referred to as industrial customers, which was common in the B2B literature (e.g Homburg and Rudolph, 2001), while the organization of the industrial customer would be referred to as the customer organization.Kotler &Proeftsch (2006) stated that business to business (B2B) is a business that runs in industrial markets that have products or other services for sales, rent, and supplied to other business This reloading subdealer business also runs in business to business (B2B) manner and focuses on the customers

Compared to consumer markets the industrial markets usually involves “greater levels of decision-making input and high transaction costs” (Russell-Bennett et al., 2007,

p 1253) and the buying process is more rationalized and involves long-term relationship (Cooper and Jackson, 1988) Products are more technically complex, more money,

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people and procedure are involved and products are often specialized to the customer organization (Cooper and Jackson, 1988)

2.1.2 Information technology (IT):

Information technology (IT) is the application of computers and telecommunications equipment to store, retrieve, transmit and manipulate date, often in the context of a business or other enterprise The term is commonly used as a synonym for computers and computer networks, but it also encompasses other information distribution technologies such as television and telephones (Wikipedia.org)

To summarize, in this dissertation, information technology companies are defined

as companies whose primary businesses activities are associated with technology industry which includes computer hardware, software, and computer services as well as concentrates on distribution or trading area

2.2 Customer Loyalty:

2.2.1 Definition:

The concept of customer loyalty has been supported much consideration and attention from both academics and practical in many industries According to Stank, Goldby& Vickery (1998) customer loyalty is defined as long-term commitment to repurchase involving both a favorable cognitive attitude towards the selling firm and repeated patronage Oliver (1999) defined it as “a deeply held commitment to re-buy or

re patronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and

marketing efforts have the potential to cause switching behavior” Dwayne Ball (2004) defined loyalty in a more specific way in both attitude and behavioral intentions (repurchase or purchase frequency), and attitudinal component Behavioral loyalty was repeated transactions (or percentage of total transactions in the category) and attitudinal loyalty was often defined as both positive affect toward the relationship’s continuance, and the desire to continue to remain in the relationship, and was sometimes defined equivalently with relationship commitment (Morgan and Hunt, 1994)

There were two factors in loyalty items, active loyalty (word-of-mouth and intention to use) and passive loyalty (not switching even under less positive conditions) Although there are so many different definitions about customer loyalty, there seem to

be two basic approaches One is the behavioral approach and another is the attitudinal approach

On the one hand, in behavioral approach, Reichheld (2003) defined customer loyalty as: “… to make an investment or personal sacrifice in order to strengthen

a relationship with a supplier who treats him well and gives him good value in the long term even if the supplier does not offer the best price in a particular transaction In additional, Rauyruen& Miller (2007, p.23) supposed that customer loyalty is the willingness of average business customers to repurchase the service and the product of the service provider and to maintain a relationship with the service provider/ supplier Furthermore, Homburg, Giering,& Menon (2003) mentioned that it is the degree of a firm’s intention to continue the relationship with the supplier and to

To sum up, customer loyalty in this dissertation is defined not only the behavioral loyalty which is to make frequent repurchases consistent in the future and attitudinal approach which is to make an effort and investment in order to remain a long-term relationship with a company

2.2.2 Importance of customer loyalty:

After the 1990s, customer loyalty became an important research question in marketing research There was an observable worldwide shift toward loyalty marketing

in most of the sectors across various industries (Alok Kumar Rai, Srivastava Medha, 2013) Ming XU (2013) pointed out that some empirical studies had proved that the chance for selling products to current customers was 50%, and the chance for selling products to a new customer was 15% If customer loyalty decreased by 5%, business profit would go down by 25% If customer retention rate increased by 5%, business profit would grow by 85%; 60% of new customers were due to current customer’s recommendations Depending on the industry, an improvement of 5% in customer retention lead to an increasing of 25% to 85% in profits (Kerin, Hartley, &Rudelius,

2009; Reichheld&Sasser, 1990) Moreover, many research showed that businesses spent more than five times as much to obtain a new customer than to retain an existing one (Kotler & Keller, 2006; Willls, 2009) Loyal customers seem to be less to switch to other competitor merely because of price, and they even repeat purchases than non-loyal customers Loyal customers are likely the most important assets of a company It is necessary to understand that keeping loyal customers means increasing long-term profit for business Hence, customer loyalty is the main destination that firms have to build through concerned factors Other factors besides customer loyalty play roles in driving a company’s growth–economics; however, customer loyalty is clearly one of the most important drivers of growth (Reichheld, 2003)

To sum up, in this dissertation, researcher would like to test factors influencing customer loyalty including customer satisfaction, trust, commitment, switching cost

2.3 Antecedents of customer loyalty:

Customer loyalty in service may be affected by many different variables which vary among services, according to the specific characteristics of each service industry (Harrison, 2000; Lewis & Soureli, 2006) From the findings of many previous studies

and some experts in this IT business trading supposed that Customer Satisfaction, Trust, Commitment, and Switching Cost are significant relationship with Customer Loyalty in

the business-to-business context Hence, in this study, researcher would like to test its relationship with customer loyalty

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2.3.1 Customer satisfaction:

Kotler (1997) stated that customer satisfaction was personal feelings which arose from a comparison between customer’s perception of product features or results, and their expectations of products Civilai et al (2007) summarized that: “Relationship satisfaction is a higher-order construct consisting of the buyer’s satisfaction with financial returns derived from the sales of the supplier’s products, with the supplier’s products and with the supplier’s sales representatives” This outcome measure allowed for economic satisfaction (financial returns derived from sales of the supplier’s products) as well as non-economic satisfaction (e.g the satisfaction that could

be derived from interpersonal relationships with the supplier’s sales representatives).” (Civilai et al., 2007: p.918) Customer satisfaction usually resulted in

three behavioral results: word-of-mouth advertising, repeated purchase, and brand commitment (Ming XU, 2013, p.58)

Effect of customer satisfaction of customer loyalty: In many previous studies,

especially in business-to-business context, several researchers showed that there was a link between satisfaction and loyalty exists Many studies have found that higher levels

of customer satisfaction could lead to greater customer loyalty (Anderson & Sullivan, 1993; Alok Kumar Rai, 2013; Srivastava Medha, 2013; Beerli et al, 2004; Bolton & Drew, 1991; Boulding et al., 1993; Einar W Aaby Hirsch, 2011; Fornell, 1992; Levesque, & McDougall, 1996; Lewis &Soureli, 2006, Shaimaa S B Ahmed Doma, 2013; Stephen L Sondoh et al, 2007) Beerli et al (2004) strongly affirmed that the relationship between satisfaction and loyalty is positive and statistically significant, which satisfaction has a greater weightier on loyalty than switching

costs It is strongly show that customer satisfaction, in the highly competitive market, is regarded as the substance of organizational success, because customer satisfaction can lead to customer retention and then to profitability for the organization (Jamal & Naser, 2002) Therefore, enhancing customer satisfaction should be a key driver for firms in building and improving customer loyalty

The following hypothesis would test this relationship in this study:

H1: Customer satisfaction is positively related to customer loyalty

2.3.2 Trust:

Trust was defined as a willingness to rely on an exchange partner in whom one has confidence, which meant that there had to be a belief in the other partner's trustworthiness that resulted from the expertise, reliability or intentionality of that partner (Ha et al, 2004) Trust was acted as a behavioral intention or behavior that reflected reliance on the other partner and involves uncertainty and vulnerability on the part of the trustee

Effect of trust on customer loyalty: Zinkeldin M & Jonsson P (2000) advocated

that the high levels of trust characteristics of relationship exchange enable parties to focus on the long-term benefits of the relationship and willingness not try to exploit the new relationship at the expense of long-term cooperation It is claimed that there is a positive relationship between customer trust and customer loyalty in previous research (Alok Kumar Rai, Srivastava Medha, 2013; Chaudhuri& Holbrook, 2001; Gundlach & Murphy, 1993; Lau & Lee, 1999, Ming XU, 2013; Shaimaa S B Ahmed Doma, 2013)

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Ball et al (2004) contended that in a competitive market, lack of trust obstructs loyalty formation Kassim and Abdullah (2010) studied the link between trust and customer loyalty in two cultural contexts i.e., Malaysia and Qatar and found it to be significant Trust as an element of customer loyalty had an influence on building customer loyalty (Aydin &Ozer 2005; Chen & Xie 2007; Du Plessis 2010) Thus, trust has been considered as an important role in enhancing customer loyalty

This study will therefore test the following hypothesis:

H2: Trust is positively related to customer loyalty

2.3.3 Commitment:

Commitment existed when a partner believed the relationship was important enough to warrant maximum efforts at maintaining that relationship in the long term (Kong Shin Yee, 2008, p.16) Zineldin M (2000) defined relationship commitment as: “An exchange partner believing that an ongoing collaborative relationship with another is so important as to warrant maximum efforts at maintaining it; that is, the committed party believes the relationship is worth working on to ensure that it endures indefinitely” (Zineldin M., 2000, p.249)

Effect of commitment of customer loyalty: Commitment and loyalty are two

concepts connected but different Beyond the favorable or unfavorable appreciation of the brand, commitment played the role of stabilizing the behaviors in time irrelevantly of the circumstances, being an essential component of long-term loyalty (Morgan and Hunt, 1994) Commitment helped customers to develop positive

intentions towards an extension of the brand to new categories of products moderating the effects of negative information about the brand on the changes of consumers’ attitudes (Ruben, 2007) This the case of B2B context, many previous studies demonstrated that there are positive relationship between commitment and customer loyalty (Armando Luís Lima de Campos Vieira, 2008; Alok Kumar Rai, Srivastava Medha, 2013; Azamhaghkhah et al, 2013; Ming XU, 2013; Shaimaa S B Ahmed Doma, 2013) Thus, this study will test the following hypothesis:

H3: Commitment is positively related to customer loyalty

2.3.4 Switching Cost:

Porter (1997) defined switching cost was relative to ongoing cost take place in using particular building re-purchase relationships with suppliers; switching costs were past costs taking place in changing suppliers

Effect of switching cost on customer loyalty: Switching costs would play an exit

barrier in a less satisfied relationship Because of switching costs, customers needed to pay more in changing products and service suppliers Switching costs could be regarded

as an exit barrier in service relationship, and exert important influence on supplier changing decision making Chen and Wang (2009) stated that switching costs may range from termination costs imposed by current service provider to costs of joining another service provider Barroso and Picón (2012) chose Spanish insurance market for studying various dimensions of switching costs and their antecedents as well as outcomes and proposed that switching cost is a higher-order construct which is a composition of six

dimensions namely (i) benefits loss costs; (ii) personal relationship loss costs; (iii)

H4: Switching cost is positively related to customer loyalty

2.4 Research model and hypothesis:

Although many previous researchers had various studies about the customer loyalty, it seemed that so few researches applied in information technology industry After reviewing above-mentioned literature as well as basing on many previous studies about business customer loyalty in different industries, researcher would like to synthesize and examine factors that affect customer loyalty in business-to-business context of Vietnamese information technology companies A casual model in proposed in which the dependent variable is customer loyalty and independent variables regarded as

the antecedent of loyalty are customer satisfaction, trust, commitment, and switching cost

Figure 2.1: Conceptual Framework

Due to above framework, the hypotheses are formed as follows

H1: Customer satisfaction is positively related to customer loyalty

H2: Trust is positively related to customer loyalty

H3: Commitment is positively related to customer loyalty

H4: Switching cost is positively related to customer loyalty

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Chapter 3: RESEARCH METHODOLOGY

In this chapter, researcher would like to mention two main parts including research design and measurement scales Moreover, tools for testing the research questions and hypothesizes are also presented

3.1 Research design:

The research design is a comprehensive master plan of the research study to be undertaken, giving a general statement of the methods to be used The function of a research design is to ensure that requisite data in accordance with the problem at hand is collected accurately and economically Simply stated, it is the framework, a blueprint for the research study which guides the collection and analysis of data The research design, depending upon the needs of the researcher may be a very detailed statement or only furnish the minimum information required for planning the research project

According to Babbie and Mouton (2004), there are different types of social research methods that can be identified from the literature, namely exploratory research, descriptive research and explanatory research Babbie and Mouton (2004) concluded that the aims for social research vary a great deal, ranging from, gaining new sights into the phenomenon; undertaking preliminary investigation before a more structured study

of the phenomenon is done; describing central concepts and constructs of a phenomenon; determining priorities for the research and developing new hypotheses about existing phenomena Since the objective of the research is to determine and examine factors affect IT business customer loyalty in Ho Chi Minh City, the research design for this study is an exploratory case study that is analyzed through mixed method

Quantitative research is an inquiry into an identified problem, based on testing a theory, measured with numbers, and analyzed using statistical techniques The goal of quantitative methods is to determine whether the predictive generalizations of a theory hold true In contrast, qualitative research approaches reality from a constructivist position, which allows for multiple meanings of individual experiences In this approach

a researcher develops a complex, holistic picture, analyses words, reports detailed views

of informants, and conducts the study in a natural setting (Creswell, 2007) The goal of qualitative research is to explore and understand a central phenomenon in a qualitative research study (Creswell, 2005)

Table 3.1: Fundamental differences between qualitative and quantitative

Surveys and tracking studies

Sampling Recruitment of participants

Sample size and error sampling procedure

Data collection

instrument

Interview with discussion guide

Questionnaire design Pre-test and modify questionnaire Data collection

process

Carry out interviews or focus group discussion

Briefing interviews Actual fieldwork

Analysis/ report

Full transcript Impressionistic collation of data and

Statistical analysis Report writing

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analysis Debrief of client

Presentation

(Source: Thomas Tan Tsu Wee, 2001)

In this dissertation, qualitative method is used for an exploratory study while quantitative method is used for a main survey which is executed for data collection to test the proposed hypothesizes The research was performed through two phases: (1) an exploratory study, (2) a main survey The purpose of the exploratory study was for exploring and refining the relevant items and building a questionnaire Furthermore, the main survey was also discussed in data collection, analysis of collected data as well

3.2 Research process:

Figure 3.1: Research process

Define research problem and identify

research objectives

Conduct pilot test

Build conceptual framework

Review related literature

Test hypothesis Findings

Give conclusion and recommendations

Generate final questionnaire

Process data Analyze data

3.3 Measurement design:

Measurements were based on the literature review of previous studies and structured interviews with some high level managers and business customer in the pilot tests

semi-3.3.1 Customer loyalty measurement:

Say positive things about this supplier to others Shun Yin Lam (2004) Buy other series of products from this supplier Shun Yin Lam (2004) Continue to buy products from this supplier Ming XU (2013)

Buy other series of products from this supplier Ming XU (2013)

Consider this supplier as my first choice when IT

consultancy services are needed

Shun Yin Lam (2004)

Even though other suppliers provide more favorable

conditions, customer will not consider them

Ming XU (2013)

Willing to establish a closer long-term relationship

with this supplier

Ming XU (2013)

Table 3.2: Customer Loyalty Measurement

3.3.2 Customer satisfaction measurement:

Employees work in a tidy professional way Kong Shin Yee (2008)

The benefits that customer receive from

maintaining relationship with this supplier

exceed those that customer can obtain elsewhere

Kong Shin Yee (2008)

Dealing with this supplier is less risky Kong Shin Yee (2008)

Supplier’s product/service quality perform much

better than the competitors

Kong Shin Yee (2008)

This supplier is very close to ideal supplier in

We believe this supplier will comply with terms

specified in the contract

Ming XU (2013)

In our relationship, this supplier gives us reliable

information and advice

Kong Shin Yee (2008)

We opine we can always trust the supplier

Kong Shin Yee (2008)

We think the supplier keeps promises

Kong Shin Yee (2008)

We think this supplier has good will reputation

Shaimaa S B Ahmed Doma (2013)

We believe the process of negotiation with this

supplier is fair, and supplier and we have equal

We suppose this supplier is reliable in providing

unique services

Shaimaa S B Ahmed Doma (2013)

We suppose our interests are taken into

consideration in this supplier’s important

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Deciding to work with this supplier was a definite

success for my firm

Zineldin M

&Jonsson P (2003) Our relationship required maximum effort and

involvement

Zineldin M

&Jonsson P (2003) Our company is fully open & honest in its

relationship with this supplier

Zineldin M

&Jonsson P (2003) Company deserves repeat purchasing and

recommendations

Zineldin M

&Jonsson P (2003)

We intend to maintain and develop this

relationship with this supplier

Table 3.5: Commitment Measurement

3.3.5 Switching cost measurement:

If we changesupplier, we are not sure which level

of products and services I can

Ming XU (2013)

Obtaining information on other suppliers costs a lot

of time, effort, and money

Ming XU (2013)

Even if we can get information on other

manufacturers, we should spend a lot time in

strengths and weaknesses evaluation

Ming XU (2013)

We need time to learn and be familiar with new

manufacturer's products and services if we change

supplier

Ming XU (2013)

Making new supplier understand what we want and

establish good relationship requires a lot of time

after changing supplier

Ming XU (2013)

Changing supplier means that we will give up

preferential policies only long-term customers could

3.4.1 Preliminary research:

3.4.1.1 First draft of questionnaire:

The first draft of the questionnaire includes two parts, which one is customer’s evaluation about loyalty and the antecedents of loyalty as well as another is customer’s

information

In the first part, there were five components including customer loyalty (with 8